Is Apple the Most Underpriced Stock on the Market?

In this video, tech and telecom analyst Andrew Tonner talks about Apple (NASDAQ: AAPL) and tells us why the company's stock is underpriced. Aggregating analyst estimates gives a price of around $584, which shows a 45% increase from Apple's current share price of below $400. Apple's operations are valued at 6 times its cash flow, and analysts are predicting a 15% long-term growth rate for the company.

Andrew also mentions two of Apple's biggest strengths: brand name and ecosystem. The company's reputation creates brand loyalty, which is why the company sees repeat customers.

Meanwhile, as investors hope for a dividend increase, Andrew looks ahead to Apple's future areas for growth in creating a new customer product category with the upcoming iWatch or the iTV.

There's no doubt that Apple is at the center of technology's largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool's senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Andrew, You are great really. But I expect you to come out on these videos screaming and ranting as you have a major meltdown. You are blue in the face now but I see it coming when Apple is at 313 next week and it could go even lower.

Nobel Prize winn Richard Ross of Auerbach Grayson who has never yet been wrong about Apple stock said we have a 20% downside to the stock.

All those analysts who say 584 average have been so wrong so we don't really want to listen to them. Let's discuss why it has been going so low.

1. People are scared to death that this stock is just going to keep going down. This is the sentiment of Melissa Lee of Fast Money/CNBC who in response to a panelist said she understood it is cheap but it is still going down. In other words, no one is buying and because it is a momentum play to the downside, people are selling. It has to get crazy cheap first and then some good news that signifies a floor under the stock. We are not yet there. So selling will continue.

2. Big funds are heavily weighted still in the stock. They are selling as see it keeps going lower. The lower it goes the more selling the more selling the lower it goes. We have to get past the Fiscal 3rd Qtr and hopefully face new product launches ie i5.

3. So we have lots of time and two bad earnings reports coming. That means the stock could keep tanking. This is why the charts and Richard Ross are saying it will keep going down. He said 20% drop is possible.

4. So we have to examine if they do come in light on earnings but in July face product launches we go down but how low. If people see the stock at 313 then they may start to get it. If we sell off Wednesday to 360 we then drift down. We could touch below 300. Would that be so low people would get in. Especially facing new product launches. I am going with Ed Zabitsky and the low could be 274.

5. At 274 and $ 170 billion in cash by the fiscal 3rd Qtr Apple could buy back half the companies outstanding shares. And by next year, it would be able to buy most of the outstanding shares.

In conclusion, I would say the pressure for Apple is down. if the earnings are not as bad as expected then we could level off or rally some. If news is leaked and shareholders expect really good things coming after Q3, then the stock could stabilize and even move up as time passes especially if it is below 300.

Yes I can certainly see why someone would think the current direction of the stock will continue! However this obviously assumes that Apple continues it's silence on the share price and does nothing to allocate the growing cash equivalent balance by end of May. This also assumes a miss on 2sdays report and a major reduction in the next qtr guidance. Then we also have to discount any news from the WWDC in June as well as no new carrier agreements(CM or NTT Docomo). Then we could see the stock collapse below 300! But I have a feeling this worst case scenario is dubious at best . After a miss on Tuesday, I can't imagine the CEO and Board will be allowed by the major shareholders to keep up this indifference to shareholder value and not act to at least allocate major stock buy backs in the beginning of May. Who knows at this point?